Phison's CEO reports that NAND flash prices have surged by up to 50% overnight due to severe shortages driven by intense AI infrastructure demand. The company is pivoting to serve enterprise clients like cloud providers, with this segment now representing 30% of its revenue.
To secure supply amidst the crisis, Phison has signed long-term agreements with multiple memory suppliers and is negotiating for prepaid chips, though it still faces inventory and financial constraints. Despite higher costs, demand from cloud and enterprise customers remains strong, fueling company revenue.
Phison is also investing in future technologies like PCIe 6.0 and has approved a plan to borrow hundreds of millions of dollars to support its operations and development during this period.
Main Topics: NAND flash price increases and industry shortage; Phison's strategic shift to enterprise and AI markets; supply chain and financial strategies to address the crisis.
Phison CEO says that NAND prices hiked by around 50% overnight, highlighting severe shortage in the industry — warns 'our current concern is that both money and inventory are insufficient'
Phison is increasingly serving cloud service providers and AI hyperscalers, with enterprise customers now hitting 30% of its revenue share from a previous 10% last quarter.
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Phison CEO Khein-seng Pua said that some NAND flash manufacturers have increased their prices by as much as 50% overnight, highlighting the severe shortage the industry has been experiencing due to the insane demand by the AI infrastructure build-out. According to Digitimes, the Taiwanese semiconductor company has now started delivering its products directly to cloud service providers (CSPs) and AI hyperscalers, resulting in a 30% revenue share for its enterprise SSD solutions.
Aside from that, it has also started asking its customers for a shorter time frame when it comes to payments, with some clients even asked to pay upfront, because Phison’s own suppliers are doing the same. This shows that the company is pivoting towards the more lucrative enterprise market, with AI tech firms with deep pockets willing to pay a premium just to ensure that they get the memory and storage chips they need to get their data centers running.
To address the uncertainty brought about by these spiraling price increases in both memory and storage costs, the company says it has already signed long-term agreements (LTAs) with six NAND manufacturers and two DRAM suppliers across the globe. The CEO said that these agreements are set in place primarily to secure sufficient supply, implying that cost is not a primary focus. It’s also negotiating for prepaid NAND chips with some suppliers, ensuring that it has priority access to these resources during shortages. In line with this, the value of Phison’s inventory grew from NT$35.6 billion (around US$1.12 billion) to NT$50 billion (around US$1.57 billion) in a matter of months, but the CEO says that it’s still facing challenges when it comes to supply, remarking, "our current concern is that both money and inventory are insufficient."
Article continues belowAside from this, Phison said that it’s not relying on the lower cost of its existing inventory to drive profit margins on its products, although it does certainly help. But despite the higher prices, demand from cloud and enterprise customers continues to increase, resulting in higher revenues for the company. He also said that the company is continuing with the development of next-generation technologies, including the delivery of PCIe 6.0 samples by August 2026 and continued work on PCIe 7.0 support. However, all of these do not come without cost — the Phison board has already approved a plan to borrow $400 million to $500 million to support all of the work that it plans to do during this time of crisis.
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Jowi Morales is a tech enthusiast with years of experience working in the industry. He’s been writing with several tech publications since 2021, where he’s been interested in tech hardware and consumer electronics.
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